CXW
CoreCivic, Inc.
$30.63
Real Estate Investment Trust
85%
P/FFO × Specialty REIT Multiple
Strong
·
Conviction
Undervalued
Trading 52.3% below fair value
You pay
$30.63
Bear
$52.59
Fair
$64.15
Bull
$75.72
Bear
$52.59
+71.7%
$2.48 FFO × 29x
Fair
$64.15
+109.4%
$2.48 FFO × 35x
Bull
$75.72
+147.2%
$2.48 FFO × 42x
Key Value Driver
FFO/share ($2.48) × specialty P/FFO multiple
Implied Market Multiple
12.3x
Summary
Our base-case estimate uses P/FFO × Specialty REIT Multiple. We then blend that result with the average analyst price target of $37.50 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $64.15 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 5.7% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $32.80 (54% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $37.50 (from 14 analysts). Our estimate is 89% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify